CPE Engineering Economics & Contract Management 3

Question 1

A contract clause stating that no oral modifications are valid is known as a:

Accepted Answer

Integration clause

Answer

An integration (or merger) clause specifies that the written contract represents the complete agreement and cannot be modified by prior or contemporaneous oral statements.

Question 2

Which economic concept explains why $1 received today is worth more than $1 received in the future?

Accepted Answer

Time value of money

Answer

The time value of money reflects that money available now can be invested to earn returns, making it worth more than an equivalent future sum.

Question 3

In competitive bidding, a bid bond typically guarantees that:

Accepted Answer

The contractor will enter into a contract if selected

Answer

A bid bond guarantees that the successful bidder will enter into a contract at the submitted bid price and provide required performance bonds.

Question 4

An economic analysis comparing alternatives with different useful lives should use:

Accepted Answer

Annual Worth (AW) method or Least Common Multiple of lives

Answer

Comparing alternatives with unequal lives requires either the Annual Worth method or analysis over the Least Common Multiple period to ensure a fair comparison.

Question 5

Under the American Institute of Architects (AIA) A201 General Conditions, a 'Change Order' requires agreement from:

Accepted Answer

Owner, contractor, and architect

Answer

AIA A201 defines a Change Order as a written instrument signed by the Owner, Contractor, and Architect agreeing to a change in the Work.

(CPE) Certified Planning Engineer Practice Test

(CPE) Certified Planning Engineer Practice Test

CPE Engineering Economics & Contract Management 3